How Does QuickBooks Work?
QuickBooks is a business accounting software program produced by the company Intuit. This double-entry bookkeeping software features an easy-to-use simple interface and automatically performs many tasks related to record keeping and data compilation. Because of its simplicity, it has become very popular, especially among small business owners who want to reduce or even eliminate the need for outsourcing their accounting work to a professional. It is not overstating the point to say that QuickBooks was the leader in a revolutionary small business movement. Many small businesses have now moved all their accounting work away from CPAs and into the hands of an in-house employee.
Many of QuickBooks' features utilize information that is provided by the user during the setup of the software. Initially, the user provides information about the business -- everything from basics like the company name and address to bank account and credit card balances. Then custom accounts are created based on the type of business being set up, for example: accounts payable, accounts receivable, equity, income, cost of goods sold and expenses. Similarly, customers, vendors and all the items that the company sells are entered. This somewhat involved process pays off. All future transactions that need to be entered are now made easily by selecting the proper account, customer and product with a simple click of the mouse. Additions, subtractions and the resulting data compilation are then all taken care of behind the scenes by QuickBooks. Correspondence such as invoices and statements can be made directly from QuickBooks via email or they can be printed and mailed.
Banks are now adding QuickBooks integration to their online banking features, allowing automatic electronic updates and account reconciliation. Many accountants are also moving toward accepting QuickBooks files in an effort to cater to those business owners who wish to have QuickBooks handle their day-to-day accounting tasks but want a professional accountant to do their yearly tax returns.
QuickBooks takes all of the data from these transactions and makes it accessible in a variety of reports, charts and graphs. Using the same point-and-click method, users can filter data by a number of different criteria and create custom reports that can be used for managing the business. Powerful business tools like these had been previously available only to large corporations; QuickBooks puts them in the hands of small business owners.